The Present Value of an Annuity Stream of $100 Per

question 2

Multiple Choice

The present value of an annuity stream of $100 per year is $614 when valued at a 10% rate.By approximately how much would the value change if these were annuities due?

• A) $10
• B) $61.40
• C) $10 ×Number of years in annuity stream
• D) $6.14 × Number of years in annuity stream

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Definitions:

Contract Formation

The process by which parties reach a mutual understanding and agreement that is legally enforceable.

Frustration

A feeling of being upset or annoyed, especially because of inability to change or achieve something, or in legal terms, the prevention of fulfilling a contract due to unforeseen events.

Clean Hands

Absence of wrongdoing on the part of a person seeking an equitable remedy.

Financial Ability

The capacity of an individual or entity to manage expenses, invest, or meet financial commitments, often determined by assets, income, and creditworthiness.